Company formation in Lithuania

Before deciding to set up a new company in Lithuania, read the information below to understand the characteristics of a Private Limited Liability Company (PLLC) / Uždaroji Akcinė Bendrovė’ (UAB):

Shareholders: at least one shareholder (can be an individual or a legal entity, resident or non-resident of Lithuania).

Director: at least one director (must be a natural person, can be a shareholder).

Company Secretary: not required.

Minimum Share Capital: €1,000. At least 25% must be paid up before registration.

Legal Address: a registered office address in Lithuania is required.

Liability: shareholders do not carry any responsibility about conducted business activities by the company.

Accounting: UAB is required to keep up-to-date and accurate accounting records, including information about financial transactions, tax obligations, and other related details.

The basic CIT rate is 15%.

The CIT rate of 0% is applied to taxable profits of newly established entities for the first taxable period, then further taxed at a rate of 5% for the following tax periods, when certain requirements are fulfilled:

• average number of employees does not exceed 10;
• income during the tax period does not exceed €300,000;
• shareholders of the entity are only natural persons;
• economic activity of the entity is not suspended, the entity is not liquidated/reorganized, and the entity shares are not transferred to new shareholders for three consecutive tax periods, including the first tax period.

In 2024, the 20% PIT rate applied to income up to €114,162 per calendar year, with a 32% rate for amounts exceeding this threshold. This includes:

• employment-related income;
• payments to members of the Board or Supervisory Board;
• income derived under copyright agreements from an individual's employer;
• income under civil agreements received by a manager of a small partnership who is not a member of that partnership.

The standard VAT rate is 21%. It applies to most goods and services, with some exceptions, such as necessities or other specific goods or services for which a reduced rate may be established.

Certain goods and services are eligible for reduced VAT rates:

• the 9% VAT rate is relevant for goods and services such as home heating and printed materials;
• the 5% VAT rate is relevant for goods and services such as medicines and medical aid equipment, technical support and maintenance of devices for disabled persons;
• the 0% VAT rate is relevant for goods and services such as the export of goods, supply, maintenance, repairs, modification, modernization, and hiring out of seagoing vessels used for transportation of passengers or goods on international routes or for other services for reward, of seagoing fishing vessels, and of vessels used for rescue or assistance at sea.

Exempt from VAT:

• goods and services related to healthcare;
• welfare services aimed at protecting the rights of minors;
• education;
• services related to sports and culture provided by nonprofit legal entities;
• postal services;
• radio and television services;
• insurance and financial services (there may be exceptions);
• lotteries and gambling;
• postage stamps;
• certain services provided by political parties, trade unions or other nonprofit legal entities and independent groups to their members;
• certain services and goods supplied by religious communities and organizations to their members;
• sale or transfer of land, except for building purposes or new buildings located on it;
• leasing of immovable property, except for hotels, motels, camping sites, residential property for a term not exceeding two months, and premises for parking or storage of transport;
• the sale or transfer of immovable property is eligible for VAT exemptions, but this does not apply to the sale of new buildings.

Double taxation avoidance agreements in Lithuania: Armenia, Azerbaijan, Belarus, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Greece, Georgia, Germany, Hungary, Iceland, India, Ireland, Israel, Italy, Japan, Kazakhstan, Kyrgyz, Korea, Kosovo, Kuwait, Latvia, Liechtenstein, Luxembourg, Macedonia, Malta, Mexico, Moldova, Morocco, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Ukraine, United Arab Emirates, United Kingdom of Great Britain and Northern Ireland, USA, Uzbekistan, Turkey, Turkmenistan.